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If you like the driver shortage, then you love these record high fuel prices

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2 pages
Commentary for the 4-25-05 issue of Traffic World magazine by Jim Johnston, President Owner-Operator Independent Drivers Association If you like the shortage of trucks available to haul your freight, then you’ll love high fuel prices. What kind of industry bemoans the shortage of drivers and trucks, holds seminars on how to recruit drivers and retain them, then allows the purging of its labor force and hauling capacity at the same time? Over 40 years in the business have shown me that simple economics are seldom relevant to the trucking industry. According to trucking economists, over the last few years more than 250,000 trucks were repossessed and over 10,000 small business motor carriers filed for bankruptcy. The inability to recoup increased fuel costs far and away being the major contributor to their failures. At the same time you can’t turn a page of a trucking trade publication without encountering ads begging for new drivers or attend a truck show without bumping into a crowd of anxious recruiters. Marketplaces that truly work do not allow for such a dichotomy. One would expect an industry that is trying to expand its capacity and seek new drivers would pay the cost of the labor they need. Not the trucking industry. During the times when fuel prices spiked, small business motor carriers and owner-operators were forced to dig into their own pockets to bear the costs of providing the services used by motor carriers, brokers ...
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Commentary for the 4-25-05 issue of
Traffic World
magazine
by Jim Johnston,
President
Owner-Operator Independent Drivers Association
If you like the shortage of trucks available to haul your freight, then you’ll love high fuel
prices.
What kind of industry bemoans the shortage of drivers and trucks, holds seminars on
how to recruit drivers and retain them, then allows the purging of its labor force and
hauling capacity at the same time?
Over 40 years in the business have shown me that
simple economics are seldom relevant to the trucking industry.
According to trucking economists, over the last few years more than 250,000 trucks
were repossessed and over 10,000 small business motor carriers filed for bankruptcy.
The inability to recoup increased fuel costs far and away being the major contributor to
their failures.
At the same time you can’t turn a page of a trucking trade publication
without encountering ads begging for new drivers or attend a truck show without
bumping into a crowd of anxious recruiters.
Marketplaces that truly work do not allow
for such a dichotomy.
One would expect an industry that is trying to expand its capacity and seek new drivers
would pay the cost of the labor they need.
Not the trucking industry.
During the times
when fuel prices spiked, small business motor carriers and owner-operators were forced
to dig into their own pockets to bear the costs of providing the services used by motor
carriers, brokers and shippers.
They depleted their savings, took second mortgages on
their homes, and cut corners wherever they could with hopes that rates would rise
consistently high enough to cover their business costs.
They haven’t.
Throughout the history of the trucking industry, the only viable marketplace solution to
erratic fuel prices has been the application of fuel surcharges.
It is a tool used by all of
the large carriers. Many of those carriers are not just recouping their increased fuel
costs.
In many cases fuel surcharges serve as supplemental revenues, the proverbial
icing on the cake.
With the truckload fuel surcharge legislation, Congress is seeking two outcomes: 1) for
smaller motor carriers and owner-operators to have access to fuel surcharges, not for
profit, but for survival; 2) for motor carriers and brokers to pass the surcharges they
collect from shippers through to the people actually paying for the fuel.
Shippers may
not realize that motor carriers and freight brokers often pass just a fraction, if any, of
their surcharges through to the truckers who open their wallets at the pump.
Nothing in the fuel surcharge legislation is not already widely used by large carriers and
accepted by shippers.
The legislation is direct and specific, eliminating any possibly of
conflict and need for legal action.
Except for those companies that refuse to comply
with the law.
The only conclusion I can draw from Mr. Voltman’s prediction that the legislation will
result in numerous lawsuits is that he has very low expectations for his members’
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compliance with laws. This opinion is both disturbing and maybe enlightening to some
of us, and merits further scrutiny by those who do business with them.
As to re-regulation?
As Congressman Roy Blunt stated, “This isn’t a request for a re-
regulation of the trucking industry . . . it is a specific tool to be used during times of high
fuel prices.”
No regulatory body plays a role in the implementation or enforcement of the truckload
fuel surcharge legislation. The legislation is in no way governmental rate setting or
market tampering. It simply provides small business truckers with access to the same
mechanism large corporations use to weather spiking fuel prices.
Its rather insightful that the primary opposition being raised to the legislation emanates
from the biggest of the big less-than-truckload carriers who already impose surcharges
and are also raking in record profits.
Perhaps they aspire to be the WalMarts of the
trucking industry – and let the small business trucker be damned.
Small businesses are the backbone of our nation’s ground transportation system.
They
are responsible for the vast majority of our freight hauling capacity.
Their economic
health is necessary if a stable trucking industry is to be available, in good times and
bad, to move freight across the country.
The truckload fuel surcharge legislation will help reduce the instability that has made the
trucking industry less reliable to shippers and to brokers over the past few years.
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